Are you looking at pay as you go on the same network or are you wanting to switch to another network? If it's the same network, you should just be able to buy a PAYG sim card and pop it in the phone. (Am I right?) As long as your contract is up I can't see how it would be a huge problem. If your phone is 'unlocked' then I think you'd be able to use another network's sim no problem. I may very well be missing something, though... 
This is absolutely correct. The first time I lived in Scotland, I had a contract phone with Orange as part of my then-bf's contract plan. When I was getting ready to return home to America after my course, he had it converted to pay as you go for me, and they sent me a new SIM card.
If you want to go with a different carrier, however, you will need to get the phone unlocked. Certain privately owned mobile phone places will do it for about a tenner, provided your phone is a popular brand like Nokia, Sony Ericsson, etc. On the whole, I think that the individual providers (e.g. Orange) are loathe to give up customers and tend not to unlock the phone for you.
However, T-Mobile in the US was VERY helpful and unlocked my T-Mobile contract phone for me without a hitch when I told them I would be travelling overseas for a number of months and that roaming charges would be too costly for me. I immediately signed up for another contract with them upon my return home, because they gave me such good customer service. I'd also had an employee phone with AT &T Wireless that I tried to get them to unlock, but they refused, even though I was an employee! So it just depends on the carrier, really, as to whether or not they'll cooperate with the unlocking.
